Yes
secured creditor shall be entitled to exercise the rights of enforcement of securities under Chapter III unless the security interest created in its favour by the borrower has been registered with the Central Registry.
Sarfaesi Act 2002 cannot be used if the mortgage is not registered with CERSAI
A bank issued notice under section 13(2) of Sarfaesi Act 2002 and have taken an order from CMM by filing case U/s 14 of Sarfaesi Act. Section 26 (D) of Saraesi Act says that if the mortgage is not registered with CERSAi, the bank canot invoke Sarfaesi Act 2002. Is it true? Please guide. If yes, how can we challenge this proceeding of bank based on Sarfaesi Act 2002?
Asked 3 years ago in Property Law
Religion: Hindu
7 Answers
section 26D of the SARFAESI Act no secured creditors shall be able to enforce security interest unless the same has been registered with the CERSAI.
Non-registration of security interest would impact the right of enforcement under SARFAESI Act only. The right of secured creditor under other laws such as IBC or under common law are still preserved.
According to the directive issued by the government, all lenders (banks, financial institutions, etc.) must register with CERSAI all information about the concrete guarantees that have been created. The registration must be completed within 30 days of the realization of the security interest.
Section 2D conditions that the particulars of creation, modification or satisfaction of security interest in any under construction, residential or commercial building or a part thereof by an agreement or instrument other than by mortgage, shall be filed with CERSAI
By registering themselves with CERSAI, the lenders can pull up the information on an asset or property to validate that whether any previous security interest has been created by a different lender ((banks, financial institutions etc.) in the past. Usually, this is done before the sanction of a loan to a borrower.
Although the institutions notified under the SARFAESI Act have to mandatorily register with CERSAI, the records of the mortgages created in their favour by deposit of title deeds, those not notified under SARFAESI Act are not debarred from filing the records with CERSAI.
No application by shall be entertained by CMM unless the loan transaction is registered with Central Registry. If you have any doubt you can check with Central Registrar, New Delhi. Record of Registrar are open to all and challenge the order seeking cancellation. You need to file such application in CMM court.
You need to file an application before the DRT for setting aside the bank's action as provisions of Sec 26 (D) have not been complied with.
Dear Client,
The SARFAESI Act isn't applicable for money or security issued under the Indian Contract Act or the Sale of Goods Act, 1930. Any conditional sale, hire-purchase, lease or any other contract in which no security interest has been created. Any rights of the unpaid seller under Section 47 of the Sale of Goods Act, 1930.The Act allows banks and financial institutions to auction properties (say, commercial/residential) when the borrower fails to repay their loans.debt or any installment thereof and his account is classified as NPA and the dues are more than Rs. 1 lac, the secured creditor can initiate SARFAESI action.
Although the institutions notified under the SARFAESI Act have to mandatorily register with CERSAI, the records of the mortgages created in their favour by deposit of title deeds, those not notified under SARFAESI Act are not debarred from filing the records with CERSAI.According to the directive issued by the government, all lenders (banks, financial institutions, etc.) must register with CERSAI all information about the concrete guarantees that have been created. The registration must be completed within 30 days of the realization of the security interest.The requirement of registration under section 20 of the SARFAESI Act is therefore applicable to all mortgages of property by deposit of title deeds created on and after the date of publication of the Rules in the Official Gazette.By registering themselves with CERSAI, the lenders can pull up the information on an asset or property to validate that whether any previous security interest has been created by a different lender (banks, financial institutions etc.) in the past. Usually, this is done before the sanction of a loan to a borrower.
Thanks & Regards
provided there is a central registry first in place by way of a notification issued by the central government
if no such central registry is constituted then there would not be any need to register charges of banks with such central registry
so first check if there is any central registry in place having jurisdiction over the property for which a security interest has been created by the borrower in favour of the bank
